BIR says Mighty’s excise taxes surge in last 4 months of 2017

CIGARETTE TAX collections on Mighty Corp. brands surged 262% to P20.22 billion in the last four months of 2017, after Japan Tobacco International (JTI) took over the local company, according to data from the Bureau of Internal Revenue (BIR).

A Department of Finance ( DoF) statement quoted BIR Commissioner Caesar R. Dulay as saying the excise tax payments on Mighty brands rose by P14.65 billion during the September to December period, from the P5.57 billion during the same period in 2016.

The P4-billion increase in monthly excise tax payments from Mighty is bigger than the Department of Finance’s ( DoF) earlier estimate of P2 billion in additional tax payments.

Mighty Corp.’s tobacco payments for the last four months of 2017 represented 28.38% of the overall excise tax collections of P71.24 billion in the same period — which was 26.68% higher from 2016’s P56.24-billion take.

During the September to December period, excise tax collections from the tobacco industry accounted for 57.4% of the total excise tax collections or P40.91 billion. Other sources of excise payments include alcohol, fuel, automobiles, minerals, and non- essential goods, among others.

“What stands out there is the Mighty- JTI improvement in collections as they represented 262% improvement from September to December,” Mr. Dulay said.

Mighty Corp. in July last year offered to settle its tax liabilities for P25 billion and sell its business to JTI to exit the tobacco business, after agents of the BIR and Bureau of Customs raided its warehouses in Pampanga, Bulacan, and General Santos City.

The BIR later filed before the Department of Justice three criminal complaints against Mighty for its use of counterfeit revenue stamps and non-payment of excise taxes.

From the tax settlement and the sale of Mighty’s assets to JTI, the government has so far collected about P30 billion, which is the largest sum of taxes ever collected from a single corporate entity.

Finance Secretary Carlos G. Dominguez III earlier said JTI might have been “front- loading stocks” of Mighty brands during the SeptemberDecember period in anticipation of the increase in excise tax payments in 2018.

Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act ( TRAIN) imposes a P32.50 excise tax per cigarette pack starting this year, from 2017’s P30 per pack. This will increase gradually to P40 by 2022.

The DoF has said it will support Senator Emmanuel “Manny” D. Pacquiao’s bill to raise the tobacco excise tax further to P60 per pack under the so- called Package 2+ expected to be submitted to Congress by mid- February.

JTI Philippines Managing Director Manos Koukourakis has said that instead of increasing taxes further, the government should look at curbing cigarette smuggling, which is said to became more rampant after the imposition of new taxes. —